Tech Giants Battling Tax Evasion Muddles?

Western governments are set to target a range of tax loopholes used by technology giants including Apple, Amazon as part of an international drive to tackle corporate tax avoidance, a draft action plan seen by Reuters said.

Western governments are set to target a range of tax loopholes used by technology giants including Apple, Amazon as part of an international drive to tackle corporate tax avoidance, a draft action plan seen by Reuters said.

The Organisation for Economic Co-operation and Development (OECD), which advises its mainly rich nation members on economic and tax policies, has been charged by the G20 group of countries with formulating measures to stop big companies shifting profits into tax havens.

Corporate tax avoidance has become a hot political issue following public outrage over revelations in the past year that companies such as Apple and Google had used structures US and European politicians said were designed to minimize the amount of taxes paid.

The OECD is now due to present an "action plan" highlighting broad areas where changes will be discussed to a G20 meeting later in July.

A preliminary draft of the plan, dated May 27, seen by Reuters, shows the organization has already identified a number of specific profit shifting schemes.

"Domestic and international tax rules should be modified in order to more closely align the allocation of income with the economic activity that generates that income," the draft said, echoing comments from politicians in the United States and Europe in the past year.

Business lobby groups have questioned whether companies do engage in activities to shift profits to units in tax havens and whether there is a need for rule changes.

But as governments struggle with large deficits following the financial crisis, lawmakers have said enough is enough.

The draft plan aims for OECD members and non-OECD G20 members to agree on specific changes to international tax rules in one to two years -- fast by the standards of international tax diplomacy.

Among the areas the draft said the OECD would seek to address are situations where companies avoid creating a taxable residence in a market where they have major activities.